Budget 2015: Happy oil workers, angry bankers

Oil platform, Bank Street sign Image copyright PA/Reuters

If you work in the North Sea oil and gas sector today was a good day.

The 10% tax cut - first revealed in my Business Blog on Monday - was welcomed by the sector.

If you work in the City - today was not quite as cheery.

The chancellor has consistently turned the tax screw on the banks, raising the bank levy a few notches at each Budget.

He did not disappoint today, revealing in the Budget that the levy increase will bring in an extra £900m in taxes from the City every year.

Of course, banks are a bit cross.

So what, many might say. They are at least partly to blame for the economic mess the country suffered following the 2008 financial crisis.

And Mr Osborne pointed out that taxpayers had bailed out badly behaved banks during the crisis. It was now time for them to pay at least some of that money back.

But, banking and general financial services are one of the few sectors of the UK economy that enjoys a healthy trade surplus with the rest of the world.

About £67bn a year at the last count.

And it employs many hundreds of thousands of people not just in London but across the UK.

Anthony Browne, the chief executive of the British Bankers' Association, revealed growing anger within the City at what is seen as a politically motivated attack on the sector.

"Banks in the UK already pay more than £40bn in taxes each year, helping to fund schools and hospitals across the country," he said.

"The bank levy imposes a significant cost on banking businesses in the UK, which is making many banks move work and jobs to other parts of the world, and is deterring international banks from investing in the UK.


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"This major increase in the bank levy is likely to accelerate that process and damage the competitiveness of the UK economy.

"This will also further disadvantage UK headquartered banks by increasing tax on their overseas activities, while their competitors in those markets do not pay this tax at all."

That last point is particularly true for HSBC, Barclays and Standard Chartered, which have large foreign operations.

The last of the three has just announced a new chief executive, Bill Winters.

Mr Winters, an American, might well want to look at whether Standard Chartered, which does nearly all of its business outside the UK, should consider moving its headquarters out of London.

HSBC has long complained about the bank levy. But, given its problems with tax evasion inquiries into its Swiss banking arm, at the moment no-one is listening all that hard to its gripes.

The oil industry was always seen as the sector any chancellor turned to when looking for a few extra tax pounds.

Today, the chancellor announced a tax cut for that sector, taking the rate back to the levels of 2011.

It now seems that banks have taken over as the sector governments like to tax.

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